[Federal Register Volume 59, Number 62 (Thursday, March 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7605]
[[Page Unknown]]
[Federal Register: March 31, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33810; File No. SR-Phlx-93-45]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the Philadelphia Stock Exchange, Inc. (``Phlx''), Relating to
the Listing and Trading of Quarterly Index Expiration Options on All
Stock Indexes for Which Index Options are Listed for Trading by the
Phlx
March 24, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on November
24, 1993, the Philadelphia Stock Exchange, Inc. (``Phlx'' or
``Exchange'') filed with Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Phlx.\1\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\On March 21, 1994, the Exchange filed Amendment No. 1 to the
proposed rule change. Amendment No. 1 amends (1) certain Phlx rules
to add references to quarterly index expiration (``QIX'') options,
and (2) Rule 1001A(d) to state that positions in QIX options will be
aggregated with full-value, reduced-value, and long-term index
options based on the same index. The Phlx also represents that at
the present time, it will not list QIX options with more than 12
months to expiration. See Letter from Catherine Humphrey, Law Clerk,
Phlx, to Sharon Lawson, Office of Derivatives and Equity Oversight,
Division of Market Regulation, Commission, dated March 18, 1994
(``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
The Phlx, pursuant to Rule 19b-4 of the Act, proposes a rule change
to provide for the listing and trading of quarterly index expiration
(``QIX'') options on the Gold and Silver (``XAU'') Index, the Utility
(``UTY'') Index, the National Over-the-Counter (``XOC'') Index, the
Value Line (``VLE'') Index, and the Bank (``BKX'') Index. The text of
the proposed rule change is available at the Office of the Secretary,
the Phlx, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Phlx has prepared summaries, set forth in sections
(A), (B), and (C) below, of the most significant aspects of such
statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
The Phlx proposes a rule change to list QIX options on the XAU,
VLE, UTY, XOC, and BKX Indexes. The proposed QIX options would expire
on the first business day of the calendar quarter for p.m.-settled
index options and on the second business day of the calendar quarter
for a.m.-settled index options. Accordingly, the XAU, UTY, VLE, and XOC
index options, whose settlement values are currently determined using
closing values of the component securities, would have their QIX
settlement values determined on the close of the last business day of
the calendar quarter and would expire on the first business day of the
next quarter. The BKX index options, whose settlement value is
currently determined using the opening values of the component
securities, would have its QIX settlement value determined on the
opening of the first business day of the next calendar quarter and
would expire on the second business day of that quarter.
The Exchange's proposal would allow for the listing of up to eight
quarterly expirations at any given time, however, at the present time,
the Exchange will not list or trade QIX options with more than 12
months to expiration.\2\ For example, if Phlx began listing QIX options
in April 1994, there could be QIX options series listed with
expirations in July 1994, October 1994, January 1994, and April 1995.
Finally, in reference to position and exercise limits, Phlx proposes to
aggregate QIX options based on a particular index with existing options
contracts based on the same index.\3\ With respect to all other
contract features, the proposed QIX options will be subject to the same
rules that presently govern the trading of existing options contracts
including: Contract terms; sales practice rules; margin requirements;
and floor trading procedures.
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\2\Id. The Commission notes that any proposal to list or trade
QIX options with more than twelve months to expiration must be filed
with the Commission for review under Section 19(b)(2) of the Act.
\3\Id.
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According to the Exchange, portfolio managers and institutional
investors frequently engage in ``quarterly hedging strategies'' as
their performance is often judged on a quarterly basis. The Phlx
believes the proposed rule change will provide investment managers and
other institutional investors with a strategic tool to accommodate
their hedging and investment needs.
The Phlx also notes that other options exchanges already list and
trade QIX options on various stock indexes\4\ and in this respect, the
Phlx represents that the Options Clearing Corporation (``OCC'') will
accommodate the proposed Phlx QIX options.
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\4\See, e.g., Securities Exchange Act Release No. 32693 (July
29, 1993), 58 FR 41817 (August 5, 1993) (QIX options on the Russell
2000 Index listed and traded on the Chicago Board Options Exchange).
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The Exchange believes that the proposed rule change is consistent
with Section 6 of the Act in general, and with Section 6(b)(5), in
particular, in that it is designed to facilitate transactions in
securities, to perfect the mechanism of a free and open market, and to
protect investors and the public interest. Specifically, the Exchange
believes that consistent with Section 6(b)(5) of the Act, the proposal
would extend the benefits of a valuable new product to the investing
public and provide competition to other similar products already
available in the securities markets.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The Phlx does not believe that the proposed rule change will impose
any burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received from Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Section, 450 Fifth Street, NW.,
Washington, DC. Copies of such filing will also be available for
inspection and copying at the principal office of the Phlx. All
submissions should refer to File No. SR-Phlx-93-45 and should be
submitted April 21, 1994.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\5\
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\5\17 CFR 200.30-3(a)(12) (1993).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-7605 Filed 3-30-94; 8:45 am]
BILLING CODE 8010-01-M
